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Monday, January 17, 2005

Party pooper

Today America says it's celebrating the birth of Martin Luther King, Jr. But at the same time, we're getting ready to celebrate the second inauguration of George W. Bush.

God help us.

Here are the themes emanating from the White House this week. King is rolling in his grave:

"We should get rid of Social Security. If you want a pension in your old age, you should have to pay fees to Wall Street investment advisors."

"It's o.k. for America to start pre-emptive wars in other countries. That way, all the terrorists are drawn to those other countries to fight us there, and there will be fewer of them to come over and kill us on our home soil."

"If you want a free education in this country, you should have to hear about Christianity as part of the deal. You should either be going to a Christian school, on a voucher if necessary, or hearing about creationism in your public school."

"The rich people are paying too much taxes. If we make wealthy investors richer, eventually they'll create jobs for the rest of you."

Comments (31)

--Martin Luther King, Jr., Remaining Awake Through A Great Revolution

I want to say one other challenge that we face is simply that we must find an alternative to war and bloodshed. Anyone who feels, and there are still a lot of people who feel that way, that war can solve the social problems facing mankind is sleeping through a great revolution. President Kennedy said on one occasion, "Mankind must put an end to war or war will put an end to mankind." The world must hear this. I pray to God that America will hear this before it is too late, because today we’re fighting a war.

come on bog...lets have some honesty (may be asking a lot from a lawyer...but so be it). we're not talking about getting rid of social security, but letting people manage some of their own money. i realize the blue state deaniacs don't trust people with their own money...but tell me that you would trust the money you made to the goverment? (slogan...average rate of return 1 percent and headed lower)
lars

Come on yourself, Lars - SS is not an investment program, so its "rate of return" is simply one of the illusory straw whipping boys drummed up to orient the red sound-byte voters to the neo-con money boy's intended goals (dismantling a longstanding and viable social safety net for all Americans, especially those that don't belong to the me-first so-called compassionate conservatives, in favor of anything that will line their pockets). And, in keeping with the so-called "philosophy" of a figurehead who's only "admitted" mistake of the last 4 years was to say "bring it on" (when he should have been saying "my intelligence sucks and hubristic pre-emptive strikes are a quagmirishly bad idea as virtually the whole world is telling me"), what is the first thing to go in the absence of real discourse on the subject? Honesty.

Doug - Effectively SS is an investment plan, however, it is more of a defined benefit program. That is the benefit paid is disproportionate to the amount paid in.

If you look at someone who retired with lots of actuarial years left in the 80s or earlier vs. the benefit they will collect, they get a great rate of return.

If I am in my 20s and hoping to collect in my 60s, the rate of return is horrible and probably negative. I think if you ask anyone in their 20s what they expect to collect from SS, I think intuitively they are aware of this.

So it does have a rate of return like any investment, just time-dependent. If you look at this factually (http://www.ssa.gov/qa.htm), we do need to address some issues rather than sticking our head in the sand.

If you have a problem with Bush (which is understandable based on the Iraq mess), fine, do you have a better alternative?

Wasn't Martin Luther King, Jr. a Reverend of some Christian denomination? I don't see why he would have been against vouchers to attend Christian schools. Would Jesus have been against school vouchers too?

Steve - Despite the fact that anyone can choose to look at SS from an investment perspective, that's not what it is. SS, like most every other government program, is essentially a current dollar transfer from taxpayers to retirees. Yes, unlike most other such programs, there is a nominal relationhip between prior earnings and the ultimate benefits, but that relationship is too attenuated to call it an investment. And beyond that point, SS begins to look like virtually every other tax-funded social program - medicaire, medicaid, HUD housing, welfare, education, etc., etc., all of which can be viewed as "investments" of one sort or another (generally good ones, in my view), but the mere ability to consider something from an investment perspective does not make it one.

This is particularly true of government programs which, we need to keep reminding ourselves, are OUR programs since WE are the government. Like the current version or not, its far closer to being our collective societal heart, mind and conscience than anything else. We fund education, We fund health care for those who cannot afford it, We fund housing for those who would otherwise do without, and We fund a social safety net for seniors.

You appear to advocate for some level of "privatization," every form of which I've seen reduces the "public" pot of funds even faster than the doomsday scenarios trumpetted near and far for the current system (break even by 2018, etc.). Simple math tells us that one cannot remove the funding for a program like SS and simultaneously claim that it will continue without degradation. If what you or GWB or anyone else want to do is dismantle the current system of basic support for retirees, at least stand up and say so. In my opinion, the United States has done a remarkable job of creating a generally balanced safety net for our senior citizens that does not break the GNP (vs. the western European systems that will likely soon implode). Let's talk first about whether we want seniors to have such a government guaranteed safety net. If the answer is "Yes," then the primary question is how to make it work for all, not how to add a greater risk/reward component for some at the expense of others. If the answer is "No," then I'm afraid our conversation heads in an entirely different direction.

And let's not forget the three trillion the 'fiscal conservatives' need to fund the initial transition. And who said they would cut the debt in half? Basically, Bush would be borrowing trillions of dollars from our children in order phase out Social Security. Call it what it is.

We already have private investment accounts: 401K, IRAs. Social Security is an insurance plan for retirement. There are no risks with SS. There are in the market. For those of us who had invested in the tech stocks in the 90s, we know what can happen.

The postings here on social security reform are Exhibit A for the case that an intelligent public discussion of this issue is impossible. There are serious problems with any meaningful reform. Unfortunately, the biggest seems to be who is proposing it.

Yes lets be honest, I know this maybe off the subject a little but lars your so far from telling the truth on a daily bases just GW is about the SS reform, who is this going to help, it’s going to help people like you lars that can afford half million homes (now I’m not saying being rich is a sin, but call like it is)

Thank you, Jack Roberts, for bringing a little sanity to this thread. Those against social security reform are either 1) using it to bash Mr. Bush for political gain, on the assumption that it is the "third rail" of American politics, or 2) unwilling to face the demographic reality behind the long-term social security problem (longer lives, fewer children/workers), or 3) are afraid to divulge their true desires for a "solution," an increase in payroll taxes.

Thinking about it some more, the AARP opposition to this proposal is very selfish. Essentially, the trillion plus debt needed to implement this system will come from current taxpayers, which includes the AARP's membership, either in the form of actual tax increases or in the form of the increased burdens of a national debt.

Whereas if the problem is ignored for 20 or 30 years until the money runs out, most of the current membership of the AARP will no longer be with us, and it won't be their problem.

Another point. You know how back when Social Security was created most people didn't live much longer than 65 years, so the program just isn't designed for the world we're now living in?

Well, this just turns out to be a canard. As Lowenstein relates, when the actuaries sat down to design Social Security only 5.4% of Americans were over 65. But contrary to the understanding of Tim Russert and other Beltway mandarins, the founders weren't fools. They knew lifespans would increase.

When they designed the program they estimated that by 1990 -- more than fifty years later -- the number would increase to 12.65%. In fact, when 1990 rolled around, the percentage was 12.45. In other words, they knew almost exactly what the demographic profile of the retired population would be. And they designed the system accordingly.

One thing they couldn't know about quite so accurately were the effects of the baby-boom and the subsequent decline in birth-rates. But those are the factors that were taken into account by 1983 Social Security Commission that raised payrool taxes and began raising the retirement age.

So for instance you have Sen. Bill Frist today, with about as much knowledge as taste, saying that in 2008 Social Security will be hit by a "huge demographic tidal wave."

But Frist must be in a time warp. Because in 1983 we knew all about the baby-boom generation and that is precisely why they decided to build up a surplus in the Social Security Trust Fund and raise the retirement age in phased stages. We've already done the reform for that.

"Those against social security reform are either 1) using it to bash Mr. Bush for political gain, on the assumption that it is the "third rail" of American politics, or 2) unwilling to face the demographic reality behind the long-term social security problem (longer lives, fewer children/workers), or 3) are afraid to divulge their true desires for a "solution," an increase in payroll taxes."

Sorry, Gordo, I think those who do think there is some need for reform, though not approaching a "crisis," distrust entirely the call to one and the call to funnel "taxes" to private investment funds. Hardly to mention the administration making the call.

The most sensible small-fix would be to take the cap off contributions and limit the payouts to those under a certain income level, say $100K.

Oh and while we're at reform, can we get rid of the double taxation woven into the income tax/payroll tax assessed on the very same income?

Sally, your proposal strikes at the fundamental heart of Social Security. It turns a retirement program into a welfare program. Essentially the rich would be paying another tax to fund retirement programs for the poor. If you're going to do that, at least be honest and pay social security benefits out of general tax revenues.

And then you go and complain about "double taxation!" "Soak the rich, but don't screw with me!" seems to be your motto.

Look, I didn't vote for George W. Bush, but his proposed social security reform was not the reason I made by choice. It is one sensible part of his overall program.

The basic argument against it is "the average schmuck doesn't know a stock from his own shoelaces and is too stupid to be given a stake in his own social security contributions." Throw in scare-mongering about "greedy Wall Streeters" into the mix for a little demagoguery to complete the picture. From what I've heard the investment possibilities for the private funds will basically be a series of index funds. Not exactly "penny stock" territory.

The basic argument against it is "the average schmuck doesn't know a stock from his own shoelaces and is too stupid to be given a stake in his own social security contributions."

Funny, I don't recall anyone here making that argument. Instead, people keep relating -- and linking to -- evidence that Bush's push is a crockpot stew of bullshit and lies. But instead of responding to any of that, you counter an idiot argument that no one here is making.

"Sally, your proposal strikes at the fundamental heart of Social Security. It turns a retirement program into a welfare program. Essentially the rich would be paying another tax to fund retirement programs for the poor. If you're going to do that, at least be honest and pay social security benefits out of general tax revenues."

Good catch. Yes, absolutely combine the tax revenues and outgoes into and through the general fund. SSI is an entitlement transfer program, from younger working to older retired. The suggestions are purely pragmatic, not ideological.

"And then you go and complain about "double taxation!" 'Soak the rich, but don't screw with me!' seems to be your motto.

Soak the rich? The suggestion was only to take the cap off contributions; even the percentage remains the same. As to "double taxation," think about how that tax (or, euphemistically, "contribution") is assessed on gross income -- the same gross income on which income taxes are assessed. It is double taxation, pure and simple. Many forms of income are subject to less or none. This basic worker income is subject to double. Think about it a little before your knee puts a dent in your forehead.

I'm going to throw in a couple things about SS I don't hear talked about anywhere. They're kind of rough. The numbers may not add up on 1). I'm just blogstorming (I may have just coined a phrase for "brainstorming on a blog").

1) The SS "tax" isn't on income. It's a payroll tax. On wages and salary up to, I think, $75,000. In other words, it's a tax on the work of upper-middle wage and salary workers (and their employers) on down. When SS was enacted, most income was work. Wealth was less concentrated at the top. It's no secret that the rich aren't rich because they earn more from work. Stock options isn't work. Investment income isn't work. Inheritance isn't work. Being an equity refugee isn't. Many CEOs and other top executives have a salary of less than $1 million, but have compensation ten times that. More and more of us are self-employed or entrepreners. I agree with those who say we ned to reform SS since a program from the encacted in the 1930s doesn't serve the 21st Century. Let's get rid of the payroll tax. Why not fund SS with a 7.65 percent tax on personal income. It wouldn't be an increase for most workers since they're paying it anyway. Employers would get a huge break to provide to reinvest or pay higher wages or provide better health care. The highest income earners would see only a modest tax increase.

2. Even if we don't change anything about social security, the best way to improve it is to have good, well paying jobs. You know, the middle-class/working-class jobs we used to have in this country. More workers earning more money means more worker and employer contributions. For example, if only 1 million more people earned $25,000 a year rather than $20,000, $765 million would be added to the SS trust fund in one year. Let's say we had the same percentage of middle-class/working class jobs as we did 20 or 30 years ago. Would SS be in the "crisis" it is now?

To JS, who says there is no social security crisis, you're right. There isn't one TODAY. Every projection I've seen says there will be one in 2042, unless a bunch of new wage earners magically appear in the U.S., presumably through massive immigration or a new baby boom - quick. Bush is trying to solve tomorrow's problem today, while it is fixable.

And to others with their solutions, Sally,and Eric, your proposals change the basic thrust of social security. Social security was founded on the premise that it was not a replica of the progressive income tax, but rather the replica (more or less) of a defined benefit pension plan. What Bush is doing, in order to save the system, is turning it into a combination defined benefit/defined contribution pension plan. Your solutions, on the other hand, turn it into a welfare program, by de-linking the payroll tax and the future benefits. I think this is a bad idea, because the closer social security stays to a pension plan, the stronger its support will be over the years. I would hate for seniors to go through some sort of "welfare reform" that some of our younger citizens went through in the 1990's.

At least you are honest in making this proposal. As far as I can tell, groups like the AARP and those in Congress in opposition are just blindly opposing this and stating that "there is no crisis."

Under the Bush proposal, the thrust of SS would change even more than anything idea I have. It turns SS from an insurance program for the common good to an investment program benefiting individuals and Wall Street. While I believe there is not a "crisis", I believe something has to be done sooner rather than later to improve SS. The Bush plan doesn't improve or "reform" SS, it dismantles it.

When SS was enacted, no one envisioned less and less of the percentage of aggragate personal income coming from wages and salaries. The current payroll tax rate, which is only onon wages and salaries under the $75,000, isn't going to sustain the trust fund for the long haul since more and more workers are earning less and less and most of the growth in income comes from people earning more than $75,000. None of that money makes its way into the SS trust fund. Tax it.

Road Work

Miles run year to date: 155
At this date last year: 241
Total run in 2015: 271
In 2014: 401
In 2013: 257
In 2012: 129
In 2011: 113
In 2010: 125
In 2009: 67
In 2008: 28
In 2007: 113
In 2006: 100
In 2005: 149
In 2004: 204
In 2003: 269